COMPETITOR INTELLIGENCE

Lexology PRO

Power up your legal research with modern workflow tools, AI conceptual search and premium content sets that leverage Lexology's archive of 900,000+ articles contributed by the world's leading law firms.

Second in time, first in right? The Third Circuit reminds us that the first-filed case doesn't always get to go first

It’s difficult to capture lightning in a bottle, an idiom that is especially true in the world of television production. As we grind into the first full week of November, many of the new series that premiered only a few scant weeks ago have already vanished from the air. (Made in Jersey, anyone?) Indeed, for a room full of writers who need a hit to stay afloat, it’s often easier to take a look at what’s popular and simply…borrow an idea or two. Or twelve.

Take LOST, for example. After premiering in the fall of 2004, LOST’s explosive ratings and viewership prompted a barrage of imitators in the following years – Surface, Threshold, Invasion, The Event, Heroes, Flashforward, the remake of V – just to name a few. The same can be said of nostalgia infused Mad Men, which prompted failed copies in the form of The Playboy Club and Pan Am. Unfortunately, there’s little to say about the imitators to the crown, as they all met a swift (or relatively swift) end. In short, when given the choice, people prefer the original. And, to a certain extent, the same can be said about lawsuits.

In Honeywell International, Inc. v. Int’l UAW, et al., Case No. 11-4557 (3rd Cir. Oct. 26, 2012), the Court of Appeals was faced with a situation where Honeywell filed a lawsuit seeking a declaratory judgment, and the day before the answer from the union was due, the union filed its own lawsuit against Honeywell on nearly identical facts (seeking, of course, the opposite result). Without delving too deep into the facts of the underlying dispute (for that would be like trying to explain LOST in under five minutes), Honeywell and the union were arguing over whether or not Honeywell could place caps on the contribution levels for their employer-provided retiree health insurance. Honeywell’s position was that it could do so, and the union disagreed. Following a series of negotiations, Honeywell filed suit in the Third Circuit for a declaratory judgment to solidify that it could, in fact, place caps on the contribution rates for retirees before a certain date. The union, however, filed their own lawsuit in the Sixth Circuit alleging that the placement of such caps would violate federal law. Underlying the strategy of both parties was the fact that the law was more favorable for the employer in the Third Circuit, and more favorable for the retirees in the Sixth.

At the district level, Honeywell argued that the court should dismiss the union’s Sixth Circuit complaint under the “first-filed” rule, a judicially created construct which, for the purposes of efficiency in the federal courts, seeks to ensure that only one case is heard regarding events that relate to the same (or substantially similar) set of facts. The second (or subsequent) cases are either then dismissed, or stayed pending the resolution of the first. The union, both at the district court and on appeal, argued that while the facts that gave rise to the two lawsuits were substantially similar, the lawsuit should proceed in Michigan, rather than the Third Circuit.

On one level, first-filed motions are typically granted virtually as a matter of course as no court wants to litigate a class action that is already being litigated elsewhere. But in this instance, the union argued that Honeywell had filed suit in the Third Circuit for the purpose of forum-shopping (likely to avoid being in the Sixth Circuit’s typically more union-friendly environment), and that the union, the negotiator, the negotiations themselves, and the language at issue in the bargaining agreements was all drafted in the Sixth Circuit. The district court agreed, and allowed the case to continue in Michigan, rather than the Third Circuit.

On appeal, Honeywell again argued that the first-filed rule dictated that its lawsuit, which was filed first, should control. The Court of Appeals, however, again, admitted that while the first-filed rule typically rests in favor of the first-filed suit, it is not simply a “given” that the first-filed suit will take precedent. Relying on the factors that the union provided regarding the negotiations, individuals involved, and the fact that the language was drafted in the Sixth Circuit, it held in favor of allowing the Sixth Circuit lawsuit to proceed. Perhaps a significant factor to the court was the likelihood that the employer could avoid a series of pro-retiree decisions from the Sixth Circuit had the case been permitted to proceed in the Third Circuit.

The Bottom Line: While the result is like watching Pan Am get renewed in the wake of Mad Men’s cancellation, the Third Circuit’s ruling in Honeywell reminds defendants that the first-filed rule is not “woodenly” applied. There are factors and circumstances that can dictate that the latter-filed suit proceed over the former.